Critics Fault North Carolina for Sending Tobacco Cash Up in Smoke

While 46 states participated in the $246 billion tobacco settlement aimed at punishing the tobacco industry for its contribution to public health problems, several of those states have decided to dump the cash right back into the tobacco industry.

North Carolina, for instance, was awarded $4.6 billion in the multi-state settlement, and politicians promised the money would be used for health care, smoking prevention and steering farmers to alternative crops. But since 1999, 75 percent of the cash has gone back into the production and marketing of North Carolina tobacco.

"Communities aren't getting their needs met and kids might be trying to stop smoking and not be able to find a program to help them quit," said Ann Houston, field director for public education and communication for the North Carolina Tobacco Prevention and Control Branch. "It's a tragic situation that so many really good programs are suffering right now."

While states are allowed to spend the tobacco settlement money any way they want, North Carolina has chosen to spend a portion on balancing the budget and prescription drugs for seniors.

Another $40 million has gone to reimbursing tobacco farmers for equipment needed to remain competitive with foreign tobacco growers. Supporters of that program say it's the best way to help farmers.

"My goodness! If people are going to buy cigarettes, let's let them buy U.S.-made cigarettes and support U.S. tobacco farmers. Let's not sustain tobacco being produced offshore and the product being manufactured in other parts of the world and imported into the country," said Graham Boyd, executive vice president of the North Carolina Tobacco Growers Association.

North Carolina tobacco growers say moving to alternative crops must be a gradual process to avoid devastation of the agriculture industry that accounts for two-thirds of the state's farming.

"If you did away with the crop of tobacco in North Carolina, you would virtually have no farming in the Piedmont and Sandhill areas," said Billy Carter, chairman of the Tobacco Trust Fund Commission and a tobacco grower.

But critics say funding tobacco production with settlement money makes no sense.

Wade Hampton, a throat cancer survivor who blames 31 years of two-pack-a-day smoking for his disease, said North Carolina's tobacco settlement has amounted to little more than a publicity stunt and a smoke screen to maintain the status quo.

"We are doing lip service, but nothing that is effective," said Hampton, who acknowledges that he is responsible for his disease but wants to make sure that kids don't take up the habit.

Effectiveness is exactly what North Carolina tobacco growers insist they are trying to achieve by the distribution of settlement money. They say a balanced approach to reducing the state's dependence on tobacco will prevent decimation of the state economy.

Fox News' Joe Hirsch contributed to this report.

Jonathan Serrie joined Fox News Channel (FNC) in April 1999 and currently serves as a correspondent based in the Atlanta bureau.